Debits & Credits
This account type is increased by a debit entry and decreased by a credit entry, often including cash, accounts receivable, and inventory.
What are asset accounts?
This section of the balance sheet includes accounts like cash, accounts receivable, and inventory, representing what a company owns.
What are asset accounts?
All-purpose journal for recording the debits and credits of transactions and events.
What is a General journal?
Individuals or organizations are entitled to receive payments.
What is Creditors?
Revenue is recognized(recorded) when earned
What is the Revenue Recognition Principle?
When recording the cash receipt from a customer on account, this account will be debited.
What is accounts receivable?
In the retained earnings statement, this figure is adjusted for dividends paid and net income or loss from the income statement, reflecting changes in retained earnings.
What is the beginning retained earnings balance?
A record containing all accounts (with amounts) for a business is also called a ledger.
What is a General ledger?
This type of entry, recorded on the left side of an account, increases assets or expenses and decreases liabilities, revenues, or equity.
What is a debit?
Company records expenses incurred to generate revenues it reported.
What is the Matching Principle(expense recognition)?
If a company records a sale on credit, this account is credited to reflect the increase in revenue.
What is a revenue account?
This financial statement provides a summary of a company’s revenues and expenses over a specific period, showing how much profit or loss was generated.
What is an income statement?
Process of recording transactions in a journal.
What is Journalizing?
The ratio of total liabilities to total assets; is used to reflect risk associated with a company’s debts.
What is a Debit Ratio?
Business is accounted for separately from other business entities and separate from its owner.
What is the Business entity assumption?
In double-entry accounting, this entry type would be used to record a company’s utility expenses increase.
What is a Debit?
This financial statement provides a snapshot of a company's assets, liabilities, and equity as of a specific date, showing the company's financial position at that point in time.
What is the balance sheet?
Process of transferring journal entry information to the ledger; computerized systems automate this process.
What is Posting?
This type of liability arises when customers pay in advance for products or services, and it is recognized as earned only when the products or services are delivered.
What is unearned revenue?
Transactions and events are expressed in monetary, or money, units
What is the Monetary unit assumption?
When adjusting for accrued interest on a loan, this type of entry will debit an expense account to recognize the interest incurred but not yet paid.
What is interest expense?
This statement shows how net income from the income statement is distributed between dividends and retained earnings, reflecting changes in the company’s retained earnings over a period.
What is the retained earnings statement?
List of ledger accounts and their balances (either debit or credit) at a point in time; total debit balances equal total credit balances.
What is the Trial balance?
This accounting system requires that each transaction impact at least two accounts, with one side being a debit and the other a credit.
What is double-entry accounting?
Reporting the details behind the financial statements that would impact users’ decisions
What is the Full disclosure principle?